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JPMorgan Chase Breakup Rumors Start Again As Banks Feel The Heat From Federal Reserve

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All the big banks operating in the U.S. have been put under several stress tests since the 2008 financial crisis, but the hardest hit is JPMorgan Chase & Co. (NYSE: JPM) owing to its position as the largest bank holding company in the U.S. by assets.

The rumors of a split up of JPMorgan Chase are again doing rounds on the Street. In a recently published article on CNBC, Jeff Cox wrote, "Sparking the latest round was the Federal Reserve's move to make JPM effectively hold 12 percent of capital as a required buffer against the type of systemic breakdown that precipitated the financial crisis in 2008 and 2009. Through stress tests and additional measures, the Fed and other regulators are looking to prevent another ‘too big to fail’ event."

CNBC's Kayla Tausche recently reported on the increasing regulatory pressure the big banks are facing.

"Thirty-one global financial institutions, all worth more than $50 billion in assets, must submit these hefty documents [to the Federal Reserve] proving that they can weather an extreme economic depression in order to hike those dividends and buybacks and then the Fed gets the final say on whether those firms meets its guidelines," Tausche said.

She continued, "There are a few banks on the hot seat this year. Deutsche Bank because it’s going through the process for the first time; Bank of America which you may recall earlier this year saw an […] force the bank to stop a $5 billion buyback; Citigroup failed altogether with the Fed voicing little confidence in the bank’s ability to predict its losses in a downturn -- the bank had to spent the entirety of past year trying to fix that problem."

Tausche also added that, "Guggenheim estimates JPMorgan may have to lower its expectations, while Goldman Sachs and Morgan Stanley should see what Guggenheim calls 'improving or sustained high capital return.'"

 

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Posted-In: CNBC Kayla TauscheFederal Reserve Media